80.2K

Verified Solution

Link Copied!

College Spirit Calendars imprints calendars with college names. The company has fixed expenses of $1,125,000 each month plus variable expenses of $4.50 per carton of calendars. Of the variable expense, 74% is cost of goods sold, while the remaining 26% relates to variable operating expenses. The company sells each carton of calendars for $19.50. Read the requirements. ..... eam $330,000 in operating income. Begin by determining the formula. Target operating income Contribution margin ratio Target sales in dollars Fixed expenses + ) - (Round the contribution margin ratio to two decimal places.) The monthly sales needed to earn $338,000 in operating income is $ 1,900,000 Requirement 3. Prepare the company's contribution margin income statement for June for sales of 485,000 cartons of calendars. College Spirit Contribution Margin Income Statement Month Ended June 30 Sales revenue 9457500 Variable expenses: Cost of goods sold Operating expenses Contribution margin Fixed expenses Operating income - Requirements 1. Compute the number of cartons of calendars that College Spirit Calendars must sell each month to break even. 2. Compute the dollar amount of monthly sales that the company needs in order to earn $338,000 in operating income (round the contribution margin ratio to two decimal places). 3. Prepare the company's contribution margin income statement for June for sales of 485,000 cartons of calendars. 4. What is June's margin of safety (in dollars)? What is the operating leverage factor at this level of sales? 5. By what percentage will operating income change if July's sales volume is 13% higher? Prove your

Answer & Explanation Solved by verified expert

See Answer